Crocs gets $200M US bailout from Blackstone
CEO John McCarvel to retire at end of April, says company behind comfy clogs
The company that makes Crocs shoes is getting a $200 million US bailout from the multinational private equity firm Blackstone and its CEO is retiring.
Crocs says it will use the money from Blackstone, plus cash on hand, for a $350 million share buyback.
The deal gives Crocs a cash infusion, gives Blackstone two seats on the board and preferred shares that pay a six per cent dividend, and gives shareholders an additional return by way of the buyback.
Crocs shares peaked above $75 in 2007 as buyers snapped up the clogs known for being comfortable but ugly. But it hasn't been able to add new products with the same popularity as the original shoe, which was designed by a Quebec company that created the proprietary Croslite material of which the clogs are made. The company also lost market share to lower-cost imitations.
Shares fell to around $1 in late 2008 before beginning a recovery. In late-afternoon trading Monday, they were up more than 21 per cent over Friday's close to $16.20 US.
Crocs also said late Sunday that CEO John McCarvel is retiring and giving up his board seat around the end of April. He has been with Crocs since 2005 and had been president and CEO since 2010. The company said it has begun an outside search for his replacement.
McCarvel called the Blackstone investment "a vote of confidence in our company and our brand."
Crocs also said fourth-quarter revenue will be at the low end of the $220 million to $225 million it had predicted, and its quarterly loss will be at the worse end of the 20 cents to 23 cents per share it had predicted. Analysts surveyed by FactSet had been expecting a loss of 20 cents per share on revenue of $222 million.